Hyundai Motor, KT to fortify automated air mobility biz via share exchange

The IONIQ 5 made by Hyundai Motor / Korea Times file

By Lee Kyung-min

A share exchange of 750 billion won ($543 million) between Hyundai Motor Group, the auto giant and KT, the country's second-largest telecommunication services provider, Wednesday, will advance the automated air mobility business, a key source of growth for the two firms, market watchers said Thursday.

They both stressed that the purpose of the exchange is investment, seeking to create distance from speculation that the shares could be used to exercise control in key business decisions.

Hyundai Motor Group and KT held a board meeting Wednesday and approved the exchange. Hyundai Motor will hold a 7.7- percent stake in KT. KT in return will hold 445.6 billion won, or 1.04 percent of Hyundai Motor and 300.3 billion won, or 1.46 percent of Hyundai Mobis, the car parts manufacturing affiliate of Hyundai Motor, respectively.

At the top of the agenda will be the construction of the infrastructure for satellite-mediated Advanced Air Mobility (AAM), enabled by the technological capabilities of KT, the country's sole developer of satellite communication technology.

KT will establish control and communication networks essential for AAM operation, whereas Hyundai Motor will develop aircraft and vertiports.

A vertiport refers to an area of land, water or structure used or intended to be used for the landing and take-off of vertical take-off and landing aircraft (VTOL)

The two will cooperate on the joint development of 6G communication standards optimized for self-driving vehicles, as tested through autonomous buses, to be run on a trial basis near KT's headquarters in Gwanghwamun, Seoul.

Electric Vehicle (EV) charging infrastructure will be built on sites owned by KT. KT's corporate vehicles will be replaced with green EVs in stages.

NH Investment & Securities said in a report that Wednesday's exchange bodes well in the medium to long-term outlook for KT.

“KT's capabilities for the mobility business will be gradually expanded,” the report said.

Automated mobility and urban air mobility services will advance, the report added, along with a host of other new technological developments in the sectors of connected cars and over-the-air (OTA) wireless technology. OTA in the technology industry means the ability to download applications, services and configurations across a cellular or wireless network.

However, returns for shareholders will slide to a per share income of 2,030 won, down from 2,200 won. Their dividend yield ratio ― as measured by the stock price divided by the dividends per share ― will remain at a robust 5.9 percent.